Its decision came a week after DHCOG subsidiary Jumeirah Group, the international hotelier that operates Dubai’s Burj Al Arab, secured a $1.4bn syndicated loan to be used to fund future growth.

"We have upgraded DHCOG's ratings because we believe that the company will be able to fully address its upcoming debt maturities, including its €750m bond due in January 2014, as a result of its subsidiary Jumeirah Group raising an unsecured $1.4bn syndicated loan," said Moody’s analyst Rehan Akbar.

Moody’s said that the next significant repayment for DHCOG, whose portfolio also includes free zone operator TECOM Investments, was a £500m bond due in January 2017.

Moody’s added that both Jumeirah and TECOM had demonstrated resilience through the economic downturn, while a recent strengthening in the emirate’s property market had boosted a third subsidiary Dubai Properties Group (DPG), and reduced DHCOG’s overall risk profile.

The ratings firm said its positive outlook was based on the assumption DHCOG was continue deleveraging efforts through sales of selective non-core assets, and that revenues from TECOM, Jumeirah and DPG would continue to provide significant debt coverage.

Based on Moody’s systems of ratings, B1 is speculative grade and at high risk of credit default.